DEPARTMENT OF THE TREAS U RY

WASHINGTON, D .C. 20220

SETTLEMENT AGREEMENT

This settlement agreement (the "Settlement Agreement") with respect to ENF - is made by
and between the U. S. Department of the Treasury's Office of Foreign Assets Control (OFAC)
and SCG Plastics Co., Ltd. ("SCG Plastics").

I. PARTIES

OFAC administers and enforces economic sanctions against targeted fore ign countries, regimes,
terrorists, international narcotics traffickers, and proliferators of weapons of mass destruction,
among others. OFAC acts under Presidential national emergency authorities, as well as authority
granted by specifi c legislation, to impose controls on transactions and freeze assets under U.S.
jurisdiction.

SCG Plastics is a trading company headquartered in Bangkok, Thailand that purchased,

marketed, and sold plastic resin products manufactured by subsidiaries and affiliates of its parent
company, SCG Chemicals Co., Ltd. ("SCG Chemicals"). SCG Plastics is currently in the
process of liquidation under the laws of Thailand.

Thai Polyethylene Co., Ltd. ("TPE") is a subsidiary of SCG Chemicals based in Thailand. In
January 2022, SCG Plastics transferred all of its assets and existing liabilities to TPE for
approximately $12.9 million. Following this entire business transfer in January 2022, all of these
assets-including employees and sales activities-of SCG Plastics now reside at TPE. To help
prevent any future violations of U.S. sanctions, and in furtherance of a settlement with OFAC
addressing SCG Plastics' apparent violations of U.S. sanctions, TPE is agreeing to a set of
sanctions compliance commitments pursuant to a separate agreement with OFAC (the
"Compliance Agreement").

II. APP ARENT VIOLATIONS

Between April 3, 2017 and November 27, 2018, OFAC determined that SCG Plastics caused
U.S. correspondent banks to process 467 U.S. dollar-denominated wire transfers totaling
approximately $291 million related to sales oflranian-origin high-density polyethylene resin
("HDPE"), a strong polyethylene resin common in many injection-molded plastic parts. The
HDPE was manufactured by Mehr Petrochemical Company ("MHPC"), a j oint venture in Iran in
which SCG Plastics' parent company, SCG Chemicals, two other unaffiliated companies, and the
National Petrochemical Company oflran ("NPC") had ownership interests. •

These 467 transactions consisted of two general categories. In the first category, SCG Plastics
engaged in 457 transactions in which it received U.S. dollar payments processed by U.S.
correspondent banks from its customers for sales of Iranian-origin HDPE manufactured by
MHPC. The total value of these transactions is $289,345,761 .22. In the second category, SCG
Plastics engaged in 10 transactions where it initiated U.S. dollar wire transfers on behalf of
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MHPC to pay for MHPC's outstanding debts to third-party vendors. The total value of these
transactions is $1,808.,357.06.

Through these transactions, OFAC determined that SCG Plastics apparently committed 467
violations (the "Apparent Violations") of§ 560.203(a) of the Iranian Transactions and Sanctions
Regulations, 31 C.F.R. pait 560 (ITSR), by causing U.S. financial institutions to engage in
unauthorized financial transactions related to sales oflranian-origin goods, in apparent violation
of§§ 560.204, 560.206, and 560.208 of the ITSR. OFAC determined that SCG Plastics
voluntarily self-disclosed the 10 apparent violations from the second category of transactions,
but that SCG Plastics did not voluntarily self-disclose the 457 transactions from the first category
of transactio~s. OFAC determined that all 467 violations constitute egregious violations.

III. FACTUAL STATEMENT

Establishment ofMehr Petrochemical Company

In March 2005, SCG Chemicals and two other unaffiliated companies established a Singaporean
company, Alliance Petrochemicals Investment (Singapore) Pte Ltd. ("API''), to enter into a joint
venture with NPC to establish MHPC to construct and operate a petrochemical plant in
Assaluyeh, Iran, a po1t city located in the Pars Special Energy Economic Zone ("PSEEZ"). The
MHPC petrochemical plant has the capacity to produce approximately 300,000 metric tons of
HDPE annually.

Under the above arrangement, SCG Plastics was assigned to be the distributor of 60 percent of
MHPC's output of Iranian-origin HDPE. MHPC began to produce HDPE sometime in 2009,
and SCG Plastics began to purchase HDPE from MHPC for resale to its customers in July 2009.

Obfuscation of Iran in Shipping and Payment Documents

SCG Plastics regularly received U.S. dollar-denominated payments for the Iranian-origin HDPE
produced by MHPC that SCG Plastics resold to its customers. To receive such payments, SCG
Plastics employed shipping and documentation practices that obfuscated the fact that the HOPE
it sold was a product ofiran, thereby evading detection by U.S. correspondent banks that
processed these transactions. An informal "Working Team" comprised of SCG Plastics' sales,
customer service, freight, finance, and accounting personnel oversaw these processes. These
practices obfuscated Iranian parties' involvement in the transactions, thereby causing U.S.
financial institutions to process these payments to third-party vendors.

In particular, SCG Plastics repeatedly issued shipping and payment documents (such as export
pro forma invoices) that replaced "Iran" as the country of origin with variants of the term
"Middle East," even though the country of origin for the goods was Iran. Similarly, the export
pro forma invoices that SCG Plastics issued to its customers listed the loading port as "any port
in the Middle East" or "Jebel Ali, UAE," without any mention oflranian ports where the HDPE
would have been loaded. SCG Plastics also routinely sent final commercial invoices to its
customers that listed the shipment as being from Jebel Ali, UAE and also listed the "origin" as
"Middle East."

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Further, SCG Plastics transshipped the HDPE through the UAE. One~ the cargo arrived in the
UAE, under direction from SCG Plastics, SCG Plastics' shipping agent issued an ocean bill of
lading and corresponding shipping documents indicating Jebel Ali, UAE as the port of loading
for the HDPE.

Additionally, in those instances where SCG Plastics paid off debts owed by MHPC in U.S.
dollars to its third-party vendors in exchange for HOPE produced by MHPC, SCG Plastics failed
to provide information to the financial institutions involved in the transactions indicating the
payments were on behalf of MHPC. The payment instructions provided by SCG Plastics
misleadingly stated the payments were for "payment for goods," even though SCG Plastics had
not purchased goods from these vendors.

Term;nation ofSCG Plastics' Distribution ofIranian-origin HDPE

In July 2018, after the United States announced that it was withdrawing from the Joint
Comprehensive Plan of Action ("JCPOA"), SCG Chemicals sold its interest in API (and, as a
result, its indirect interest in MHPC) to a Hong Kong company. At this point, SCG Plastics
ended its sales oflranian-origin HOPE.

IV. TERMS OF SETTLEMENT

OF AC and SCG Plastics agree as follows:

1. In consideration of the undertakings of SCG Plastics in paragraph 2 of the Settlement

Agreement below and the undetiakings of TPE in paragraph 2 of its Compliance
Agreement with OFAC, dated the 14 +h. day of feb rv/1,Jry , 2024, OFAC agrees to
release and forever discharge SCG Plastics, without any finding of fault, from any and all
civil liability in connection with the Apparent Violations arising under the legal
authorities that OFAC administers.

2. In consideration of the undertakings of OF AC in paragraph l above, SCG Plastics agrees

and represents:

A. SCG Plastics is in the process of liquidation under the laws of Thailand and will not
engage in further business activities after the execution of this Settlement Agreement
other than those necessary and required, or ordinary and incident under Thai law to
complete its orderly process of liquidation.

B. Within ninety (90) days of the date that both SCG Plastics and OFAC sign this
Settlement Agreement, SCG Plastics will pay or arrange fo r the payment by another
payor or payors to make payment on its behalf to the U.S. Department of the Treasury
the amount of $20,000,000. This payment must be made either by electronic fonds
transfer in accordance with the enclosed instructions, or by cashier's or certified
check or money order payable to the "U.S. Treasury" and referencing ENF -

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 C. SCG Plastics will waive (i) any claim by or on behalf of SCG Plastics, whether
asserted or unasserted, against OFAC, the U.S. Department of the Treasury, or its
officials and employees arising out of the facts giving rise to the enforcement matter
that resulted in this Settlement Agreement, inc luding but not limited to OFAC's
investigation of the Apparent Violations, and (ii) any possible legal objection to this
Settlement Agreement at any future date.

3. Should OFAC detennine, in the reasonable exercise of its discretion, that SCG Plastics has
made any material m isrepresentations or materially breached its obligations under
paragraph 2 above, OF AC w ill provide notice to SCG Plastics of its determination and
whether OFAC is re-opening its investigation. The statute of limitations applying to the
Apparent Violations shall be deemed tolled until a date 180 days follow ing SCG Plastics'
receipt of notice of OFA C's determination that a breach of, or misrepresentation in, this
Settlement Agreement has occurred.

4. This Settlement Agreement does not constitute a final agency determination that a
violation has occurred and shall not in any way be construed as an admission by SCG
Plastics that SCG Plastics engaged in the Apparent Violations.

5. This Settlement Agreement has no bearing on any past, present, or future OFAC actions,
including the imposition of civil monetary penalties, with respect to any activities by SCG
Plastics or TPE other than those set forth in the Apparent Violations.

6. OFAC may, in its sole discretion, post on OFAC's website this entire Settlement
Agreement and/or issue a public statement about the factors of this Settlement Agreement,
including the identity of any entities involved, the settlement amount, and a brief
description of the Apparent Violations.

7. This Settlement Agreement consists of five (5) pages and expresses the complete
understanding of OFAC and SCG Plastics regard ing resolution of OF AC's enforcement
matter involving the Apparent V iolations. Other than the separate Compliance Agreement
with TPE, no other agreements, oral or written, exist between OF AC and SCG Plastics or
its affiliates regarding resolution of this matter.

8. This Settlement Agreement shall inure to the benefit of and be binding on each party, as
well as its respective successors or assigns.

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th.
SCG Plastics accepts the terms of this Settlement Agreement on this ~ day of

_._
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1___,2024.
e= 'o:::...'r- l'J'--Ol._l'_,_

Signature

Printed Name of SCG Plastics' Duly Authorized

Representative

Printed'ritle of SCG Plastics' Duly Authorized

Representative

. h Digitally signed by Bradley T.

Bra d Iey T. Smit Smith
Date: 2024.02.1416:54:31 -05'00'
Date: _ _ _ _ _
Bradley T. Smith
Director
Office of Foreign Assets Control